Export Rights explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The permission exists only for research and regulatory use. Step outside that purpose and the right does not merely end — it becomes an infringement.
The dispute
In March 2017, the Delhi High Court granted Indian pharma company Alembic the permission to export the generic version of German pharma giant Bayer's lifesaving medicines for regulatory and research purposes. The ruling comes as much needed relief to Indian drug manufacturers locked in legal battles with the inventors of such drugs.
The German company had taken the legal route in 2016 to stop Alembic from exporting the generic version of its blood thinner brand "Xarelto". In what is seen as a major setback for Bayer, the Indian court has allowed Alembic to export the generic version for clinical development and research purposes.
Alembic was required to give an undertaking that the drug wouldn't be exported for any purpose other than those listed in Section 107A of the Indian Patents Act, 1970. However, Bayer alleged that Alembic had exported 90kgs of the drug worth INR 3 Crores which was in violation of Section 107A of the Indian Patents Act, 1970.
Most intangibles are described by what they permit. This one is defined by what it excludes.
Section 107A permits acts done for uses reasonably related to the development and submission of information required under law — the regulatory exception that lets a generic manufacturer prepare for market entry before a patent expires. The permission is real, and commercially significant: it removes years of delay after expiry.
But the undertaking is part of the asset. Alembic had to confirm the drug wouldn't be exported for any purpose other than those listed in Section 107A. Exports for commercial sale are not covered, and the allegation that 90kgs of the drug worth INR 3 Crores went beyond the exception is precisely a dispute about the boundary.
For a valuer, three consequences follow.
First, the benefit stream is not product revenue. The right generates no sales of the drug; it generates earlier market entry after expiry. The cash flows to model are the accelerated launch, not the exported quantities.
Second, control is contested. The right exists but is being litigated, so the probability that it survives in its present form is part of the valuation — a case for probability weighting rather than a point estimate.
Third, the economic life is short and defined by the patent. The exception matters only until expiry; after that, ordinary competition applies. This is a textbook case of legal factors setting a life far shorter than the commercial opportunity.
Where it sits in the framework
| Test | Export rights under section 107A |
|---|---|
| Identifiability | Arises from a legal right — a statutory exception confirmed by court order |
| Control | Held subject to an undertaking; contested in litigation |
| Future economic benefits | Earlier market entry on patent expiry, not revenue from the permitted exports |
| Separability | None — the permission attaches to the party and its undertaking |
Litigation as a purpose of valuation
The Standard lists among the purposes of an intangible valuation litigation, when there has been a breach of contract or right and the compensation has to be determined. This case is exactly that: if the exception was exceeded, the measure of Bayer's loss requires the patent right to be valued and the infringement quantified.
The consignment figure — 90kgs of the drug worth INR 3 Crores — is evidence of the scale in dispute, not of the value of either party's intangible.
What a valuer should do
- Model the acceleration benefit, not the exported volumes.
- Weight for the probability that the permission survives challenge.
- Cap the life at patent expiry in the relevant markets.
- State the undertaking and its scope as an assumption in the report.
Common mistakes valuing export rights
- Valuing the permitted export volumes as commercial revenue.
- Treating a contested right as unconditional.
- Extending the life beyond the patent term the exception depends on.
- Ignoring the undertaking that limits the permitted purposes.